DeFi Protocol ZeroLend Shuts Down After 98% TVL Crash
Lending protocol ZeroLend has shut down after three years of operation, following a 98% collapse in its total value locked (TVL). The protocol's team cited a cascading liquidity drain across Layer-2 networks, hacks, and unsustainable economics as reasons for the closure. The collapse highlights ongoing risks related to thin liquidity and security threats on smaller chains.
- At its peak in November 2024, ZeroLend held a Total Value Locked (TVL) of nearly $359 million, which plummeted to approximately $6.6 million by the time of the shutdown. - The protocol's founder, known as "Ryker," confirmed the decision to wind down operations in a public statement. - Specific Layer-2 networks that experienced a significant drop in liquidity, contributing to the shutdown, included Manta, Zircuit, and XLAYER. - A key technical reason for the closure was that price oracle providers, which supply essential real-time data for lending markets, discontinued support for some of the chains ZeroLend operated on. - The protocol's native token, ZERO, dropped by 34% in the 24 hours following the shutdown announcement and has lost nearly all of its value since its peak in May 2024. - To manage the shutdown, ZeroLend set the loan-to-value (LTV) ratio to 0% on most markets to halt new borrowing and is planning smart contract upgrades to help users withdraw funds stuck on illiquid chains. - The team announced that users impacted by a previous exploit on a Lombard Staked Bitcoin (LBTC) product on the Base network will receive partial refunds funded by the team's LINEA airdrop allocation.
